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5 Achievements

5.1 Impacts

The evaluation team has assessed impact from the F&B Programme interventions within four different areas: production, income, employment and export.

Production

The production effect from the F&B grant has been significant. The survey data (Table 4) show that production levels for cherry, plum, raspberry and blackberry have increased significantly in the period from 2012 to 2015 for those farmers who have received a grant from the F&B Programme. For those farmers who have not received a grant the production levels for the same F&Bs only show minor changes compared to the 2012 levels.

Table 4: Grant effect – changes in production levels from 2012 to 2015 (average tons)
  Grant beneficiaries Non-beneficiaries
  2012 2015 Difference (%) 2012 2015 Difference (%)
Cherry 10.65 12.05 + 13% 4.96 4.86 - 2%
Plum 17.43 18.91 + 8% 10.55 10.56 0%
Strawberry 7.76 7.96 + 3% 4.79 4.75 - 1%
Raspberry 9.00 13.20 + 47% 3.25 3.18 - 2%
Blackberry 5.71 5.38 + 16% 4.00 4.23 +6%

Source: Survey data collected by the evaluation team

The only F&B that does not fit into this pattern is strawberry. Although positive, the survey data only showed little difference between the 2012 and 2015 production levels. The evaluation team tried to investigate this issue in the FGDs. Some farmers mentioned that the increase in strawberry production already took off in their district prior to 2012 and that results would therefore already be notable in the 2012 production data (this was the case in Toplica and Jablanica districts). Other farmers explained that the grant from the F&B Programme had been used less for strawberry production than for other F&Bs. It should be mentioned that the average production increases calculated from the survey data are in the lower end of the monitoring data on production increases collected by the F&B Programme, especially the data on strawberry production.

The perception of non-beneficiaries is that the F&B Programme has encouraged and initiated development of the F&B sector in the region. They agreed that the F&B Programme has been an important driver of revitalization of the F&B sector in south Serbia.

All participants in the FGDs (beneficiaries and non-beneficiaries) were of the opinion that no intentional or unintentional exclusion from the F&B Programme support had happened. The only mentioning was that in some cases limited financial means of the farmers would prevent them to apply for the F&B grant due to the requirement to pre-financing. In addition, it was mentioned several times in the FGDs, that in the last call the F&B Programme should have included criteria to limit the number of applications for the larger[7] companies that had benefited from each call (e.g. to a maximum of three grants in total). This would have opened up for the possibility that a larger number of producers and companies could benefit from grants, especially in the last 5th call for proposals. On the other hand, the successive support to the relatively bigger industrial players may also be considered a strategic important element to create the “space” in the value chains for the smaller farmers.

It should be recognized that particular efforts have been done by the F&B Programme to encourage ethnic Albanian groups within three municipalities with ethnic Albanian populations to participate in the programme (e.g. special sessions, translation into Albanian of documents etc.) through a cooperation with the Office of the Coordination Body of the Government of Serbia for the Municipalities of Presevo, Bujanovac and Medvedja. However, despite these efforts, only one application had been received from an ethnic Albanian from the Medvedja municipality. According to the FGDs and key stakeholder interviews, an explanation to this is that there has been resistance in the Albanian communities to register their farms and agricultural businesses with the GoS. There are also issues related to the ownership of land and its registry in the official cadastres.

Besides the employment effects, the evaluation team did not observe significant changes or benefits for women in relation to the F&B Programme interventions, apart from the advantage that they had during the grant application process (higher number of points for women grant applicants). Some stated that improvement in machinery and equipment in households helps both men and women to work less hard in agriculture, but they do not see some specific benefits only for women.

The mix of grant with targeted capacity building activities has significantly contributed to F&B production increases. The production increases for grant holders that have attended F&B capacity building activities are significantly higher than for those grant holders that have not attended F&B capacity building activities (Table 5). These data largely confirm the farmers’ high satisfactory rating of the capacity building activities (see Section 5.3) and underline the importance of capacity building as complementary to the grant mechanism in this programme.

Table 5: Capacity building effect - changes in production levels from 2012 to 2015 (%)
  Grant beneficiaries
– with training
Grant beneficiaries
– without training
Cherry + 14% + 10%
Plum + 10% + 2%
Strawberry + 5% - 1%
Raspberry + 57% +17%

Source: Survey data collected by the evaluation team

Income

Income from F&B production is a crucial source of income for the large majority of the farming households that have benefitted from the F&B programme support. The survey data show that income generated from F&B production is among the three most important sources of income for nearly all farming households, including the non-beneficiaries (Table 6).

Table 6: Main sources of income in 2014 for farming households (three most important sources selected by beneficiaries and non-beneficiaries)
  Observations
Production of fruits and berries 297
Commercial processing of fruits and berries 16
Vegetables production 48
Commercial processing of vegetables 4
Crop production 117
Livestock production 90
Employment in private sector 105
Employment in public sector 80
Self-employment 72
Other 102

Source: Survey data collected by the evaluation team

Income from F&B production increased significantly more than income from other economic activities for farming households (grant beneficiaries) in the period from 2012 to 2014 both in absolute and relative terms. This finding is in line with the findings in Section 4.1, which showed significant production impact from the F&B grants.

Table 7: Average income amounts in 2014 and 2012 for different economic activities (farming households, grant beneficiaries)
  2014 (RSD) 2012 (RSD)
Production of fruits and berries 1,112,727 739,269
Vegetables production 408,571 328,000
Crop production 169,904 158,571
Livestock production 560,639 470,276
Employment in private sector 496,786 415,192
Employment in public sector 544,667 607,222
Self-employment 284,722 250,000
Other 270,898 557,000

Source: Survey data collected by the evaluation team

The majority of the FGD grant beneficiaries stated that compared to the situation before 2012, it is now possible to live from agriculture, but not only from F&B production. Production of F&B is very sensitive and depends highly on weather conditions, so the majority of the producers practice mixed production (usually F&B production in combination with husbandry) and production of vegetables (especially in Jablanica district) in order to reduce the risk of loss due to a bad year or fruit diseases. Only the largest producers can afford to live only from F&B production.

The FGD grant beneficiaries agreed that the F&B Programme had provided them with a better future. With the renewed machinery and equipment obtained from the grants, almost all farmers stated that they had already expanded their plantations. For young plantations it is too soon to predict how profitable these plantations will be. However, the farmers explained that they already plan to reinvest profit in irrigation, nets against ice rain and new machinery and equipment. The survey data showed that beneficiaries are using a larger share of their profit for reinvestment into the F&B sector (27%) compared to the non-beneficiaries (18%).

Employment

The short-term employment effect from the F&B Programme has been significant. In the period from 2012 to 2015, the employment increased substantially more at farms that had received a grant from the F&B Programme than at farms that had not received a grant (Table 8). The F&B production in southern Serbia is heavily dominated by seasonal (part-time) employment and the survey data show that it is additional seasonal employment that has been created.

Table 8: Average number of seasonal employees (farming households)
  Grant beneficiaries Non-beneficiaries
  Number Number
Seasonal employees for F&B production 2015 (2012) 50 (45) 23 (22)
Seasonal employees for F&B production - Women 2015 (2012) 44 (39) 17 (16)
Seasonal employees for F&B production - Youth 2015 (2012) 17 (15) 12 (11)

Source: Survey data collected by the evaluation team

The employment data also show that although more modern machinery and equipment have been provided through the F&B Programme grants, the F&B sector is still highly labour intensive and has the potential to generate local employment in the short-term.

It is in particular women that have benefitted by the jobs generated through the F&B Programme. Basically all new seasonal jobs that have been created are female jobs and a third of them have gone to young women. The survey data on employment to a large extent confirm the indications from the latest Annual Progress Report (2014) and Review Aide Memoire (2014) of significant short-term employment effects from the F&B Programme interventions, not least within the farming households.

Export

Serbia is a main global exporter of frozen and processed F&B and the most important provider to the French and German markets. Frozen and processed F&B therefore constitute an important export commodity in Serbia and account for 17% of total Serbian gross agricultural product export. Since agriculture accounts for nearly a quarter of total Serbian exports, the importance of the F&B production to the Serbian export and economy in general is evident.

Serbia is world’s second largest producer of plums (second to China) as well as of raspberry (second to Russia). In terms of frozen raspberry, Serbia is a global leader. In the period from January to July (seven months), the Serbian export of frozen raspberry increased from 34,071 tonnes in 2013 to 40,013 tonnes in 2014 and 43,837 tonnes in 2015[8]. The increase in export of frozen raspberries from 2014 to 2015 was mainly due to large increases in demand from France (+16%), Austria (+78%) and Russia (173%). It is interesting to note that these same markets (France, Austria and Russia) are those where the larger processors and exporters in Nis mention that they have managed to establish business relations recently (mainly through their participation in international trade fairs in Moscow, Paris and Cologne, supported by the F&B Programme). This is another indication that there is a high potential for export of F&B from Serbia.

Given the high production increase in raspberry production among F&B Programme grant beneficiaries between 2012 and 2015 (see Section 4.1) it is reasonable to conclude that the support from the F&B Programme has contributed significantly to the large increase in export of frozen raspberries in the period.

The F&B programme has contributed importantly to recent export increases in frozen and processed F&B. The F&B programme has also encouraged the local F&B producers to start selling their fresh products since profit from fresh fruit sale is relatively larger compared to profit from sale of frozen and processed fruit. This has resulted in an increasing focus on fresh fruit sale, mainly to the local market. There are also examples of producers who have started to export fresh F&B, e.g. fresh strawberry to Russia. However, there are still many challenges for the farmers and cold stores operators in the south of Serbia related to export of fresh F&B. Serbia is not member of EU, and procedures for export of fresh fruits are more complicated then between members of EU. It is also directly connected with logistic problems, such as transport and customs, as well as with standards and certificates. The latter would require substantial investment in equipment and technology used in the production process, as well as support to establishing of commercial activities related to export markets for fresh F&B.

5.2 Outcomes

Changes in land and environmental conditions

The F&B programme has contributed to a significant increase in the area of land used for F&B production in the Nis region. Grant beneficiaries have rented significantly more land in the period from 2012 to 2015 than the non-beneficiaries (Table 9).

Table 9: Comparison of farm sizes in 2012 and 2015 (farms ‹ 100ha)
  Grant beneficiaries Non-beneficiaries
  Average (ha) Average (ha)
Land owned in 2015 5.41 4.18
Land owned in 2012 5.13 4.01
Land rented in 2015 7.34 2.76
Land rented in 2012 4.90 2.35

Source: Survey data collected by the evaluation team

The FGDs with grant beneficiaries confirmed the relatively large increase in the amount of rented land among the grant beneficiaries. Most farmers explained that the large majority of the land they had rented was uncultivated before and that they were now using it for F&B production. In particular new cherry, plum and raspberry trees have been planted. The farmers explained that the grant they had obtained through the F&B Programme had given them possibility to invest and expand their F&B production area. Since the majority of the new fruit trees are only one-two years old, it must be expected that the production effects from these plantations still have not materialised.

It is also noted from Table 9 that the amount of owned land has not changed significantly in the period from 2012. According to the farmer FGDs this is due to government land ownership issues of land that was nationalized after the II World War. Much of this land has been of high quality but is currently deteriorating, neglected and not being used. From the farmers; point of view this land issue is one of the most important constraints that prevent them from increasing income and employment in the sector.

The F&B Programme has contributed to environmental improvements in the F&B production but has not effectively supported improvements in soil fertility and water supply (Table 10).

Table 10: Grant beneficiaries’ perceived changes in environmental factors from 2012 to 2015
  Environment Soil fertility Water supply
Got much better 2.82 4.26 4.20
Got better 62.68 8.51 9.79
Stayed the same 34.51 87.23 86.01
Got worse 0 0 0
Total 100.00 100.00 100.00

Source: Survey data collected by the evaluation team

The general perception of the majority of FGD participants is that after 2012, the use of fertilizer and pesticide has been noticeably declining on most farms in the area, partially due the economic crisis and partially due to education and actions for awareness raising intended to encourage producers to adopt more environmentally friendly and sustainable agriculture practices. The farmers found that the latter was partly a result of the training efforts from the F&B Programme on these topics and partly a result of an increased “nursing” from service providers and input suppliers during the period in order to optimize production processes on farms. Many producers use only organic manure, but FGD participants also explained that there are still examples of uncontrolled application of fertilizers (e.g. urea) that leads to even higher acidity of the soil.

Soil quality is often a problem for the F&B producers (due to high acidity), but regular soil analysis are still not the standard practice of south Serbian producers, although offered periodically for free by the MoA. FGD participants expressed doubts in results of the analysis performed by labs from the region, since there were examples of copy-paste results, or completely different results from the same soil sample. According to a professor in one agricultural school that has a certified lab, the demand for soil analysis has increased from 1,000 analyses in 2012 to 5,000 analyses in 2015. Only a few FGD participants found that the recommendations they got as a result of soil analysis has helped them to improve the quality of their soil and the products.

Organic production in the region is still undeveloped, and apart from few processors (Coja-prom in Aleksinac that is certified for organic production/processing of forest fruits and Midi Organic in Blace that does mostly processing) there were no other examples of such practice in the FGDs. Regarding other certificates for food safety, only bigger processors operate under ISO standards such as ISO 9001 and ISO 22000. There were no examples in the FGDs of primary producers using Global Gap standards.

Two interviewed processors were using plums kernels as fuel for drying plant facility or heating in their companies. One facility for drying plums was using solar panels (co-funded through the F&B Programme grant scheme). Some FGD participants and processors mentioned that photovoltaic cells and smaller solar panels could be very useful if the process of getting the needed licenses could be simplified by the relevant ministries. The F&B Programme design has not had any particular focus on encouraging processors and producers to implement greener solutions to their production processes, although it has been possible to apply for these types of projects under the F&B Programme grant scheme.

As a negative factor, in the FGDs the farmers emphasised scarcity of water and lack of irrigation systems as a very critical factor to the F&B production. High cost for drilling of the pipe wells and uncertainty of the results of drilling are the most important factors that prevent the F&B producers from these investments. The F&B Programme has defined drilling as an infrastructure investment, which would be expected to be taken care of by the local government (the municipality) in cooperation with the farmers.

Changes in Human Capital

The F&B training activities have been relevant for the target groups and have been an effective complement to the grant scheme.

The large majority of processors and producers who have participated in F&B capacity building activities have found them important in relation to their F&B production and in particular, the practical training on how to improve and increase F&B production processes and the training related to business planning and farm management were highly rated. In the farmer FGDs, the importance of training on production techniques was emphasized as the most useful of the training provided to the farmers (in particular pruning). The FGD farmers emphasized the usefulness of having some of the best professors from the university among the lectures, but also that their presentations could have been adapted more appropriately to the audience. In the FGDs, the farmers did not recognise training on business planning and farm management with equal importance as in the survey (see Table 11 below).

The training on “Standards” and on “Cooperatives” was scored as relatively less important by the farmers in the survey. According to the farmer FGDs, the issue with “Standards” is related to the relatively small size of the F&B farms and the fact that standards for F&B production and distribution is becoming still more expensive and harder to implement for the farmers. Cooperative membership would be a more affordable way to certification of different standards for the farmers.

The relatively limited importance given by the farmers to training on “cooperatives” is largely related to farmers’ general unwillingness to form cooperatives (see also Section 5.3).

Table 11: Training participants rating of training modules (level of importance for their F&B production)
  Prac-
tical
Grant
applica-
tion
Business
plans
Farm
manage-
ment
Coop-
eratives
Stand-
ards
Preven-
tion of
diseases
Study
Tour
Trade
fair
“Very important” or “Important” 98 86 80 81 56 50 100 100 95
“Less important” or “Not important” 2 14 20 19 44 50     5

Source: Survey data collected by the evaluation team

Activities such as visits to trade fairs and study tours were directed more to processors than to producers and were rated as important events.

Social Capital

Group formation and association

The F&B Programme has not been successful in encouraging farmers to establish producer groups or cooperatives. Only 13% of the surveyed farmers are organised in either producer groups or cooperatives (Table 12).

Table 12: Membership of producer groups or cooperatives
  Number Percent
No 373 86.95
Yes 56 13.05
Total 429 100.00

Source: Survey data collected by the evaluation team

Despite strong and continuous efforts from the F&B Programme, it has been difficult to convince F&B producers of the benefits from group formation and associations. The FGDs revealed that this resistance has a lot to do with the history of Serbia. In addition, until now the GoS has not been particularly supportive in terms of establishing of cooperatives. The limited degree of association within the F&B sector is a critical issue not only at regional level but also at national level in Serbia. According to interviewed representatives from the ministry, the F&B sector is characterized by a large degree of fragmentation in comparison to other agricultural sectors. This makes the sector relatively less influential at policy level, even compared with agricultural sectors of minor national economic importance (e.g. honey producers have a much stronger and more influential association in Serbia than the F&B producers).

Farmer FGDs and interviews with larger cold storage operators and processors clearly showed that the lack of organisation of the smaller farmers makes it difficult for them to become sufficiently powerful in negotiations with the cold storage operators and processors. The small F&B producers usually find themselves in a weak bargaining position where they have to accept the conditions proposed by the more powerful buyers. In those areas where there are limitations in storage and processing capacity it becomes even more difficult for the smaller farmers to negotiate.

Both farmers and the interviewed storage operators and processors pointed at another problem related to the lack of farmer organisation: the difficulty to plan ahead. The farmers would like to have more firm agreements with buyers for marketing of their production while the cold storage operators and processors would like to have better control with the quantity and quality of the various products they receive. This would make it easier for them to enter export markets.

Most of the FGD farmers were not members of any existing association or cooperative related to F&B production. An exception from this were producers in the municipality of Razanj (Nisava district) that have a strong association of fruit and grape producers. Three of the six interviewed processing companies are members of the Regional Fruit Cluster of South Serbia, which is based in Leskovac (Jablanica district). All three of them have participated in at least one project implemented by the Cluster[9].

The association of fruit and grape producers from the municipality of Razanj (Nisava district) presents a good example of a joint initiative. The association currently has 97 members, the majority of them smaller producers and/or owners of mini processing facilities. The association is well organised and strong enough to influence on municipal agricultural policy, regardless of political affiliation of its members. It advocates members’ interest and provides financial means from the Municipal Agricultural Fund every year for free of charge seedlings, trainings and advisory services for its members. Moreover, because of its unity and good cooperation between members, the association has raised its negotiation position with buyers to the level of being one step ahead of buyers and capable, not only to influence but also to dictate prices to buyers and processors. The association in fact operated much like a company. The strongest member, who was more of a risk-taker, was running the organisation as the leader. The other members were risk avoiders, and they only wanted to secure markets and fixed prices for their production, which the leader provided for them. On the other hand, the leader made all the investment decisions for the association on his own, carrying all the risks and taking the largest rewards.

In the FGDs, the farmers expressed that they were not convinced that adapted models of successful cooperatives from western countries could be functional in Serbia, it would have to come with adequate change of mindset of people on all levels. The farmers were very reluctant to the idea of pooling resources in cooperatives, and emphasized several times that cooperatives would need to be established on clear and honest basis, with clear connection between invested assets and level of power in decision-making.

Most of the farmers were questioning the appropriateness of cooperatives for the Serbian context. The “one member one vote” concept was considered a challenge when farmers have different financial means and objectives when it comes to accessing markets, distributing profits or reinvesting it into the business.

Relationships with service providers, suppliers and/or buyers

It has not been possible through the F&B Programme to radically change the prevailing informality that characterizes the market for F&B in the south of Serbia. The large majority of the F&B producers do not have any formal agreements with the buyers of their product. Depending on the production level and the location and distance to cold storage and processing facilities, the farmers’ F&B production is either picked up by local collectors or delivered directly to the storage or processing plants by the farmers themselves (Table 13).

Table 13: Sales arrangements in 2015 for local F&B producers (%)
  Local collector Local processor Cold store operators
Signed contract     15
Sales receipt 75 87 76
Other agreement 25 13 9

Source: Survey data collected by the evaluation team

The farmer FGDs confirmed that the type of agreements have not changed radically since 2012. The large majority of the farmers are still paid “on receipt” when they either deliver their production to the cold storage or processor or the production is picked up at their farm. It was a strong wish from the farmers that longer term contracts could be made with the buyers to give them security.

Table 14: Grant beneficiaries perceived changes in relationships (%)
  Professional network Relationships with buyers
and input suppliers
Got “much better” or “better” 35 62
Stayed the same 63 36
“Worsened” or “worsened a lot” 2 2

Source: Survey data collected by the evaluation team

The farmer FGD participants found that in general the relationships between producers and buyers had improved since 2012, although the market is still fragmented with poorly organised producers and local monopoly of cold storages and processors. Traders that act as middlemen, with small trucks at collection points purchase their entire production at relatively low prices during harvest time. Traders usually pay cash, sometimes even without receipt, taking advantage of the producers having no storage facilities and being in need of cash in the short term. In this way the producers are not able to benefit from the possibilities of having higher prices at a later period of the season. The F&B producers explained that before the F&B Programme support, it happened that traders disappeared with the products without paying for them. This would not happen today, partially due to F&B Programme contribution that significantly has raised the capacities of the cold storages and processors in the region, which now have to act more responsible towards producers in order to keep their own processing capacities fully utilized.

Recently, a few processors have started with the practice of providing fertilizers and pesticides, or even of advance payment for the producers as a sort of contractual obligation. Although the FGD farmers provided examples of misuse also in relation to this modality, the farmers were in general positive towards this concept, since both processors and producers have tangible and mutual benefits from it, the processors will be ensured fully utilized processing facilities and the producers guaranteed sales of their products. The FGD farmers agreed that lack of cooperation and communication, unfair competition (monopoly) and an atmosphere of mistrust are still present in relationships on all levels. However, the general impression of the FGD participants was that the situation has improved since 2012.

All FGD participants, both grant beneficiaries and non-beneficiaries, found that access to inputs for production has improved since 2012. Since the market of agricultural inputs was liberalized in Serbia, production/processing inputs such as fertilizers, seeds and seedlings, fuels and power, agricultural machinery and other input supplies have become more available comparing to the period before. In the past couple of years there is also an expansion of different companies, producers and distributors of agricultural inputs that in conquering of the new markets, offer their products on competitive prices and together with all sorts of free advisory services to producers/processors. The planting material (seedlings) used is mainly produced and purchased on the domestic market, and is not always certified.

The majority of the F&B producers that participated in the FGDs demonstrated obvious lack of knowledge about market possibilities in Serbia as well as for export. The large majority of them would rather sell products as raw materials to traders, just very few of them that possess mini processing facilities (e.g. drying plants) would sell part of the yield as semi-finished (e.g. prunes).

The majority of the FGD participants stated that when deciding what to produce, the first and the most important thing was the profit and traditional production in the region. It is interesting that only a minority of the FGD participants considered market demand as a priority and raised the question of the importance of a national strategy with a regional perspective for the F&B sector.

The farmers use multiple sources of information on markets and prices (e.g. TV, agricultural input shops (agricultural pharmacies), internet and internet forums particularly, agricultural extension services, as well as direct contacts with other producers and processors). In the last couple of years, people in general have better access to internet where most information can be easily found. The farmer FGDs and interviews with processors revealed that processors are much better informed and connected than producers in getting information about markets and especially prices. The processors’ main information channels go through direct communication not only with domestic but also with foreign partners and connections. They use internet more functionally and follow and adapt to the changes in the international market (e.g. the situation in Poland, Chile regarding EU market, or Russia).

Although the producer prices are negotiated and agreed before every harvest season, usually the prices, dictated by owners of cold storages, are formed and paid to producers on a daily basis depending on the quality of the fruits and market situation. The price is usually lower in the beginning of the season.

Physical Capital

Changes in cold storage and processing capacities

According to the farmer FGDs, the F&B Programme has contributed significantly to a substantial improvement in capacities of the processing facilities, especially cold storages, since 2012. The value chain analysis carried out by the F&B Programme clearly identified lack of cold storage as a key bottleneck in the sector, and the programme was geared to find a solution to that challenge. FGD participants stated that in areas such as Pcinja and Jablanica districts, cold storages capacities have been doubled or even tripled since 2012. The overall impression of the FGD participants was that this particularly type of support had been very important for the value chain development. Adequate storage and processing capacities are crucial for maintaining the value in the F&B value chains, in particular for the export market where Serbia is an important player.

The FGDs with farmers and interviews carried out with cold storage owners and other F&B key stakeholders also showed that real storage capacity varies considerably from one area to another and in a number of areas the storage facilities are operating at full or nearly full capacity. Figures from the 2012 Agricultural Census showed excess storage capacity in most areas, however according to the key stakeholders interviewed these data reflect a failed privatization process of a large number of cold storage centres in the south of Serbia. These centres were formerly state or public owned and have for various reasons become dysfunctional (e.g. they have no owner, are bankrupt, are in reconstruction or partly/fully being converted into other activities). Recently, and through considerable efforts from the F&B Programme, the increasing demand for cooling storage capacities in the south of Serbia have been noticed by private investors and more investment in cold storage facilities is now taking place. This has helped replace the decline in capacities of the previously mentioned public/state cold storages facilities.

It was noted by the evaluation team however, that most of the new cold storages are able to handle only the most basic treatment (cooling, freezing, primary sorting), while other aspects of treatment and high value processing are still lacking. Likewise, due to changes in the climate the period of harvesting has been shortened, which put further pressure of storage and cooling capacities in the peak season. Some participants underlined lack of equipment/facilities at traders’ collection points, such as refrigeration trucks to prevent decomposing or fermenting of the F&Bs.

A major part of the grants from the F&B Programme have been provided to the farmers to replace old and obsolete machinery and equipment with new and more modern items (Table 15). This upgrade in the physical capital stock has been an important factor for the increases in F&B production from 2012 to 2015.

Table 15[10]: Equipment provided to the interviewed F&B grant beneficiaries
Plantations 18
Machines/tools for planting and clearing after pruning 7
Machines/tools for plant protection from disease, pests, weeds, hail and cold 42
Machines/tools for picking 1
Machines/tools/equipment for indoor fruit production 1
Equipment for irrigation 17
Equipment for washing, sorting, etc. 7
Equipment for cooling, transport and cold storage 4
Tractors, two-wheel tractors and implements 46
Observations 193

Source: Survey data collected by the evaluation team

FGD participants agreed that the grant beneficiaries have got a better starting position, because of the new equipment, machinery or new plantations they built. But the medium- to longer-term impacts still need to be seen. Many plantations are still young and need a lot of work and attention before the real benefits from these investments can be measured.

According to the FGD participants, there are sporadic cases of grant beneficiaries whose primary occupation is not agriculture, where machinery and equipment is not fully utilized or not used at all. But these cases were described as exceptional cases: the large majority of the grant beneficiaries were reported to use their equipment for F&B production, as well as for other type of agricultural production (e.g. tractors)[11].

Financial Capital

Beside the possibility for accessing the F&B grant scheme and the income generated from higher production, the evaluation team found no indication that farmers now had better access to finance compared to the situation before the F&B Programme started.

The F&B grant scheme has gradually become very attractive to F&B producers and processors. It has not been an option for many of the small F&B farmers to get a loan or credit from the local bank. Both interest rates and collaterals are unrealistically high for the farmers. The survey data clearly illustrates this situation as 82% of the grant beneficiaries are financing their own share of the investments with equity (Table 16).

Table 16: How do the grant beneficiaries finance their share of the investment?
  Number Percent
Equity 107 82.31
Bank loan 23 17.69
Total 130 100.00

Source: Survey data collected by the evaluation team

There is no indication that farmers have got better access to financial services than they had before the F&B Programme. Although the F&B Programme has contributed to an improvement in the farmers’ business planning skills, their perspective for accessing financial support for future investment in F&B production at their farms are still limited. Although significant efforts have been done through the F&B Programme, it has only to a limited extent been possible to organise smaller farmers into cooperatives and producer groups, which could have put them in a stronger position for accessing future financial support for their production activities. Individually the large majority of the small farmers are still not able to obtain loans and credit from banks and financial institutions.

In the FGDs, the farmers explained that their main reasons for not applying for the F&B Programme grant was the lack of other financial means for extending the production (new plantations), new equipment and machinery that could reduce costs of production and increase efficiency, competitiveness and profit.

They explained the unfavourable Serbian agrarian structure they were experiencing, with unregulated market of agricultural products, small subventions to agricultural production, depopulation, in combination with old mechanization (e.g. 25-35 year old tractors), traditional ways of production and low level of business connections, which do not provide conditions for economic safety of rural households.

The farmers also explained that the initial mistrust that existed among the producers and processors has been replaced with satisfaction with the F&B Programme after the 2nd call for grant proposals. According to the grant beneficiaries, the procedures for the grant application were not complicated and the criteria for evaluation were fair.

The FGD farmers were aware that the Serbian financial sector offers a wide range of loan products to the agricultural sector. The list of lenders includes banks, state/municipal funds, leasing companies, etc. It was interesting that all small producers that participated in the FGDs, regardless which district they come from, have real aversion towards loans and credits. As main reasons for this they stated: enormous interest rates by the commercial banks (often up to 24%), unstable economic situation and unpredictability in cash flows, inefficient government loans often heavily influenced by political parties, and high risk of the F&B sector itself. Furthermore, even the banks often reject applicants for loans since the perception is that the creditworthiness of borrowers in agribusiness is weaker than of those in other sectors.

The FGD farmers were aware that there are a number of state-owned organisations and funds that provide lending or support to lending for the Serbian agricultural sector. The terms and conditions of these loans are very favorable, with significantly lower interest rates than those available in the market (6%). The smaller F&B producers would only use these state agricultural loans with low interest rate, but they also mentioned that disbursement of the loans, especially from municipal agricultural funds is often heavily influenced by local politics and in reality, not equally available for everyone.

On the other side, almost all interviewed processors seemed to be better informed, have different attitude regarding borrowing and all reported frequent use of loans for different purposes, but mostly for extension of the production halls, cold storages and equipment.


[7] It should be mentioned that the Serbian government changed the definition of SMEs, so that some companies that for previous CFAs had been defined as large companies were defined as SMEs for CFA5.

[8] Source: Agra-net.net.

[9] In past 10 years, the MoA along with other government and foreign institutions, has worked to build clusters based on the projects, recognizing the importance of networking of agricultural producers, government institutions, R&D sector, as well as organisation for support to SMEs.

[10] This list is based on the information provided by the surveyed grant holders and is not based on the full list of grant holders.

[11] The MoA, thorugh the F&B Programme, make inspections to the grant holders to see if the equipment is properly used.

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This page forms part of the publication "Evaluation of Danida Support to Value Chain Development – Serbia Country Study" as chapter 5 of 8.
Version no. 1.0, 2016-07-05
Publication may be found at the address http://www.netpublikationer.dk/um/evaluation_value_chain_development_serbia/index.html